Gold markets are experiencing unprecedented momentum in 2025. Prices are breaking multiple record highs as China’s central bank maintains its aggressive purchasing strategy. The People’s Bank of China (PBoC) has emerged as a dominant force in global gold markets. It is fundamentally reshaping price dynamics through sustained institutional demand. One notable trend is China’s Central Bank influencing the direction of the gold market.
The PBoC has demonstrated unwavering commitment to expanding its gold reserves throughout 2024 and 2025. After a brief six-month pause, Beijing’s monetary authority expanded its gold reserves in November. This ended the temporary suspension of purchases. The buying spree has continued with remarkable consistency. The institution expanded its gold reserves for a fourth month in February, as the precious metal rallied to record high according to China’s Central Bank policies.
The scale of China’s gold accumulation is staggering. Gold Reserves in China increased to 2292.31 Tonnes in the first quarter of 2025 from 2279.56 Tonnes in the fourth quarter of 2024. This represents a systematic approach to diversifying foreign exchange reserves. There is also a focus on reducing dollar dependency.
Gold’s performance in 2025 has been nothing short of spectacular. Gold began 2025 with vigor. The LBMA Gold Price PM and the Shanghai Gold Benchmark Price PM both saw their strongest January in years, rising by 8% and 5% respectively. The precious metal has continued this upward trajectory. Gold prices are expected to average $3,675/oz by the fourth quarter of 2025 according to J.P. Morgan Research.
The correlation between Chinese institutional purchases and price appreciation is undeniable. Market analysts note that Beijing’s consistent buying provides a strong price floor. It creates bullish sentiment across global gold markets, notably influenced by China’s Central Bank’s role.
China’s gold strategy extends beyond simple reserve diversification. The purchases reflect broader geopolitical considerations, including currency stability concerns and hedging against potential economic volatility. This pushed China’s official gold holdings to 2,280t, which is 5.5% of total foreign exchange reserves and 44t higher than the end-2023 level. This demonstrates the scale of this strategic shift driven partly by China’s Central Bank.
The ripple effects extend throughout Asia’s gold markets. Chinese investor demand has surged alongside official purchases. Specifically, investor demand for gold ETFs jumped in 2024, attracting RMB31bn (US$4.4bn), the strongest on record.
Market fundamentals suggest continued price strength. Official central bank gold demand topped 1,000 tonnes for the third straight year in 2024. China is leading this institutional buying wave. Central bank surveys indicate this trend will persist, with 81% of respondents expecting the gold holdings of global central banks to continue growing in the next 12 months, influenced significantly by China’s Central Bank.
However, elevated prices may moderate some consumer demand. Elevated gold prices are likely to continue to curb consumer demand. This could potentially encourage recycling, potentially creating some price headwinds.
For investors, China’s central bank gold purchases represent a paradigm shift in precious metals markets. The sustained institutional demand provides fundamental price support. It also highlights gold’s role as a strategic asset in an increasingly multipolar financial system.
As China continues building its gold reserves, investors should monitor monthly purchase data. They should also pay attention to broader Chinese economic policies that may influence buying patterns. The current environment suggests gold’s bull market has strong institutional backing. This could sustain higher prices throughout 2025 and beyond, as evidenced by China’s Central Bank activities.
